Major Asian stock markets are tightening their rules regarding listed companies whose primary focus is holding cryptocurrencies.
A recent report by Bloomberg indicates that stock exchanges in nations like India, Australia, and Hong Kong are strengthening regulations to limit firms from primarily functioning as custodians of digital currencies.
In Hong Kong, Hong Kong Exchanges & Clearing Ltd., the leading exchange operator, has rejected applications from several businesses seeking listings based on a business model heavily reliant on cryptocurrency asset holdings.
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Bloomberg’s report indicates that these decisions align with existing rules designed to prevent companies from operating primarily as “cash companies”—entities that predominantly hold liquid or easily traded assets without engaging in a substantial operational business.
India follows a similar approach. The Bombay Stock Exchange recently rejected an initial public offering (IPO) from a company planning to allocate the raised capital to cryptocurrency investments.
ASX, the primary stock exchange in Australia, also enforces restrictions. It prohibits listed firms from holding more than 50% of their total assets in cash-equivalent forms, which includes digital currencies.
This regulation effectively renders the standard crypto treasury model impractical. As an alternative, companies seeking exposure to digital assets are advised to explore establishing exchange-traded funds (ETFs) as a separate investment structure.
Of late, investors are displaying increased caution when assessing businesses holding substantial Bitcoin